China Seeks To Cap Star Salaries, Crack Down On Tax Evasion

A group of Chinese government organizations issued a notice late Wednesday in an effort to curb “unreasonable pay” with a directive that seeks to cap “astronomical” star salaries. According to the official Xinhua news agency, the state bodies said total remuneration shall not exceed 40% of a production’s cost while star payments must not be more than 70% of the total wage costs. This goes for movies, TV series and online programming. Also in the cross-hairs are tax evasion and other issues which must be managed in order to promote the healthy development of the business rather than “distorting social values.”

The move comes a few weeks after the PROC said it would launch a tax evasion investigation into the industry. That crackdown followed a row between Chinese TV presenter Cui Yongyuan and superstar actress Fan Bingbing. Cui had posted images of multiple documents on a social media account that he claimed were copies of different contracts signed by the actress for the same job. She has denied any wrongdoing, but the overall practice of so-called “yin and yang contracts,” a method of tax evasion in which only the contract of lower value is declared to the authorities, was cited as a concern by the state bodies in their notice on Wednesday.

The issues the groups are tackling increase the cost of productions, affect quality and “undermine the health and ecology of the film and television industry,” the notice said, per Xinhua. They also result in “misleading youth.”

The State Administration of Radio and Television, the new film and TV body created when SAPPRFT was abolished to bring oversight more closely under the thumb of the communist party, will strengthen its supervision and control of stars participating in TV programs (including variety and reality shows) and strictly regulate the management of film and TV. Competition will also be a focus with the groups saying companies must not engage in bidding wars.

The notice gives top priority to “social benefits” and says all types of media at all levels “should create a favorable atmosphere for the sound development of the film and television industry,” according to a translation of the Xinhua report.

The notice was jointly issued by SART, the National Film Bureau, the State Administration of Taxation, the Central Propaganda Department and the Ministry of Culture and Tourism.

China has increasingly been tackling corruption in the booming entertainment sector. Last year, it launched a campaign to take on box office fraud. In late 2016, authorities also issued a first-of-its-kind film industry law that would promote core socialist values.